UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10 - Q


(Mark
One)
 [
      X ]
                QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For
the quarterly period ended September 30, 2009
 
 OR
 
 [   ]
                TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For
the transition period from _________ to __________.








Commission
File Number:  000-53165







FSP
303 East Wacker Drive Corp.


(Exact
name of registrant as specified in its charter)





Delaware
            20-8061759(State
      or other jurisdiction of
            (I.R.S.
      Employerincorporation
      or organization)
            Identification
      No.)





401
Edgewater Place, Suite 200


Wakefield,
MA 01880-6210


(Address
of principal executive offices)(Zip Code)




(781)
557-1300


(Registrant’s
telephone number, including area code)




N/A


(Former
name, former address and former fiscal year, if changed since last
report)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.





YES
            [
      X ]
            NO
            [   ]





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).





YES
            [   ]
            NO
            [   ]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.





Large
      accelerated
      filer  [   ]
            Accelerated
      filer [   ]Non-accelerated
      filer    [   ] (Do
      not check if a smaller reporting company)
            Smaller
      reporting company [ X ]




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).





YES
            [   ]
            NO
            [
      X ]





The number
of shares of common stock outstanding was 1 and the number of shares of
preferred stock outstanding was 2,210, each as of October 31, 2009.









FSP
303 East Wacker Drive Corp.





Form
10-Q





Quarterly
Report


September
30, 2009





Table
of Contents





PagePart
      I.
            Financial
      InformationItem
      1.
            Financial
      StatementsConsolidated
      Balance Sheets as of  September 30, 2009 and December 31,
      2008
            2Consolidated
      Statements of Operations for the three and nine months ended September 30,
      2009 and 2008
            3Consolidated
      Statements of Cash Flows for the nine months ended September 30, 2009 and
      2008
            4Notes
      to Consolidated Financial Statements
            5-7Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            8-12Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            13Item
      4.
            Controls
      and Procedures
            13Item 4T.
            Controls
      and Procedures
            13Part
      II.
            Other
      InformationItem
      1.
            Legal
      Proceedings
            14Item 1A.
            Risk
      Factors
            
            14Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            14Item
      3.
            Defaults
      Upon Senior Securities
            14Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            14Item
      5.
            Other
      Information
            14Item
      6.
            Exhibits
            
            14Signatures
            
            15





1




PART
I – FINANCIAL INFORMATION




Item
1.        Financial
Statements.


FSP
      303 East Wacker Drive Corp.
              Consolidated
      Balance Sheets
              (Unaudited)





September
      30,
            
            
            December
      31,(in
      thousands, except share and par value amounts)
            
            2009
            
            
            2008Assets:Real
      estate investments, at cost:Land
            
            $
            26,200
            
            
            $
            26,200Buildings
      and improvements
            
            
            132,614
            
            
            
            131,541Furniture
      and Equipment
            
            
            161
            
            
            
            -158,975
            
            
            
            157,741Less
      accumulated depreciation
            
            
            9,648
            
            
            
            6,870Real
      estate investments, net
            
            
            149,327
            
            
            
            150,871Acquired
      real estate leases, net of accumulated amortization
              of
      $4,231 and $4,159, respectively
            
            
            5,376
            
            
            
            6,667Acquired
      favorable real estate leases, net of accumulated
              amortization
      of $2,639 and $3,181, respectively
            
            
            3,723
            
            
            
            4,601Cash
      and cash equivalents
            
            
            22,399
            
            
            
            23,878Tenant
      rent receivable
            
            
            85
            
            
            
            58Step
      rent receivable
            
            
            2,262
            
            
            
            2,104Deferred
      leasing costs, net of accumulated
              amortization
      of $201 and $98, respectively
            
            
            786
            
            
            
            677Prepaid
      expenses and other assets
            
            
            154
            
            
            
            136Total
      assets
            
            $
            184,112
            
            
            $
            188,992Liabilities
      and Stockholders’ Equity:Liabilities:Accounts
      payable and accrued expenses
            
            $
            9,170
            
            
            $
            8,595Tenant
      security deposits
            
            
            332
            
            
            
            583Acquired
      unfavorable real estate leases, net of accumulated
              amortization
      of $239 and $209, respectively
            
            
            298
            
            
            
            368Total
      liabilities
            
            
            9,800
            
            
            
            9,546Commitments
      and Contingencies:
            
            
            -
            
            
            
            -Stockholders’
      Equity:Preferred
      Stock, $.01 par value, 2,210 shares authorized,issued
      and outstanding at September 30, 2009 andDecember
      31, 2008, aggregate liquidation preference $221,000
            
            
            -
            
            
            
            -Common
      Stock, $.01 par value, 1 shareauthorized,
      issued and outstanding
            
            
            -
            
            
            
            -Additional
      paid-in capital
            
            
            197,162
            
            
            
            197,162Retained
      deficit and distributions in excess of earnings
            
            
            (22,850
            )
            
            
            (17,716
            )Total
      Stockholders’ Equity
            
            
            174,312
            
            
            
            179,446Total
      Liabilities and Stockholders’ Equity
            
            $
            184,112
            
            
            $
            188,992See
      accompanying notes to consolidated financial statements.





2





FSP
      303 East Wacker Drive CorpConsolidated
      Statements of Operations(Unaudited)





For
      the Three Months
            
            
            For
      the Nine MonthsEnded
      September 30,
            
            
            Ended
      September 30,(in
      thousands, except share and per share amounts)
            
            2009
            
            
            2008
            
            
            2009
            
            
            2008Revenues:Rental
            
            $
            5,494
            
            
            $
            5,847
            
            
            $
            16,771
            
            
            $
            17,496Total
      revenue
            
            
            5,494
            
            
            
            5,847
            
            
            
            16,771
            
            
            
            17,496Expenses:Rental
      operating expenses
            
            
            1,501
            
            
            
            1,556
            
            
            
            4,660
            
            
            
            4,629Real
      estate taxes and insurance
            
            
            1,797
            
            
            
            1,434
            
            
            
            4,732
            
            
            
            4,418Depreciation
      and amortization
            
            
            1,350
            
            
            
            1,491
            
            
            
            4,173
            
            
            
            4,368Interest
      expense
            
            
            7
            
            
            
            -
            
            
            
            7
            
            
            
            -Total
      expenses
            
            
            4,655
            
            
            
            4,481
            
            
            
            13,572
            
            
            
            13,415Income
      before interest income
            
            
            839
            
            
            
            1,366
            
            
            
            3,199
            
            
            
            4,081Interest
      income
            
            
            18
            
            
            
            137
            
            
            
            94
            
            
            
            535Net
      income attributable to preferred stockholders
            
            $
            857
            
            
            $
            1,503
            
            
            $
            3,293
            
            
            $
            4,616Weighted
      average number of preferred shares outstanding,basic
      and diluted
            
            
            2,210
            
            
            
            2,210
            
            
            
            2,210
            
            
            
            2,210Net
      income per preferred share, basic and diluted
            
            $
            388
            
            
            $
            680
            
            
            $
            1,490
            
            
            $
            2,089See
      accompanying notes to consolidated financial statements.










3





FSP
      303 East Wacker Drive Corp.
              Consolidated
      Statements of Cash Flows
              (Unaudited)  For
      the Nine Months Ended
                September
      30,(in
      thousands)
              
              2009
              
              
              2008Cash
      flows from operating activities:Net
      income
              
              $
              3,293
              
              
              $
              4,616Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
              
              
              4,173
              
              
              
              4,368Amortization
      of favorable real estate leases
              
              
              878
              
              
              
              1,250Amortization
      of unfavorable real estate leases
              
              
              (70
              )
              
              
              (80
              )Bad
      debt expense
              
              
              -
              
              
              
              20Changes
      in operating assets and liabilities:Tenant
      rent receivable
              
              
              (27
              )
              
              
              (104
              )Step
      rent receivable
              
              
              (158
              )
              
              
              (570
              )Prepaid
      expenses and other assets
              
              
              (18
              )
              
              
              (41
              )Accounts
      payable and accrued expenses
              
              
              531
              
              
              
              737Tenant
      security deposits
              
              
              (251
              )
              
              
              (207
              )Payment
      of deferred leasing costs
              
              
              (213
              )
              
              
              (402
              )Net
      cash provided by operating activities
              
              
              8,138
              
              
              
              9,587Cash
      flows from investing activities:Purchase
      of real estate assets
              
              
              (1,190
              )
              
              
              (2,973
              )Net
      cash used for investing activities
              
              
              (1,190
              )
              
              
              (2,973
              )Cash
      flows from financing activities:Distributions
      to stockholders
              
              
              (8,427
              )
              
              
              (7,896
              )Net
      cash used for financing activities
              
              
              (8,427
              )
              
              
              (7,896
              )Net
      decrease in cash and cash equivalents
              
              
              (1,479
              )
              
              
              (1,282
              )Cash
      and cash equivalents, beginning of period
              
              
              23,878
              
              
              
              25,353Cash
      and cash equivalents, end of period
              
              $
              22,399
              
              
              $
              24,071Supplemental
      disclosure of cash flow information:Cash
      paid for:Interest
              
              $
              7
              
              
              $
              -Disclosure
      of non-cash investing activities:Accrued
      costs for purchase of real estate assets
              
              $
              380
              
              
              $
              362See
      accompanying notes to consolidated financial statements.







4


FSP
303 East Wacker Drive Corp.


Notes
to Consolidated Financial Statements


(Unaudited)





1.
            Organization,
      Basis of Presentation, Financial Instruments and Recent Accounting
      Pronouncements





Organization





FSP
303 East Wacker Drive Corp. (the “Company”) was organized on December 13, 2006
as a corporation under the laws of the State of Delaware to purchase, own, and
operate a twenty-eight story multi-tenant office tower containing approximately
859,187 rentable square feet of office and retail space and a 294-stall
underground parking garage located in downtown Chicago, Illinois (the
“Property”).  The Company acquired the Property and commenced
operations on January 5, 2007. Franklin Street Properties Corp. (“Franklin
Street”) (NYSE Amex: FSP) holds the sole share of the Company’s common stock,
$.01 par value per share (the “Common Stock”).  Between February 2007
and December 2007, FSP Investments LLC (member, FINRA and SIPC), a wholly-owned
subsidiary of Franklin Street, completed the sale on a best efforts basis of
2,210 shares of preferred stock, $.01 par value per share (the “Preferred
Stock”) in the Company.  FSP Investments LLC sold the Preferred Stock
in a private placement offering to “accredited investors” within the meaning of
Regulation D under the Securities Act of 1933.





All
references to the Company refer to FSP 303 East Wacker Drive Corp. and its
consolidated subsidiary, collectively, unless the context otherwise
requires.





Basis
of Presentation





The
unaudited consolidated financial statements of the Company include all the
accounts of the Company and its wholly owned subsidiary.  These
financial statements should be read in conjunction with the Company's financial
statements and notes thereto contained in the Company's Annual Report on Form
10-K for the year ended December 31, 2008, as filed with the Securities and
Exchange Commission (“SEC”).





The
accompanying interim financial statements are unaudited; however, the financial
statements have been prepared in accordance with generally accepted accounting
principles (“GAAP”) in the United States of America for interim financial
information and in conjunction with the rules and regulations of the
SEC.  Accordingly, they do not include all of the disclosures required
by GAAP for complete financial statements. In the opinion of management, all
adjustments (consisting solely of normal recurring matters) necessary for a fair
presentation of the financial statements for these interim periods have been
included.  Operating results for the three and nine months ended
September 30, 2009 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2009 or for any other
period.





Financial
Instruments





The
Company estimates that the carrying value of cash and cash equivalents
approximate their fair values based on their short-term maturity and prevailing
interest rates.





Recent
Accounting Pronouncements




In June
2009, the Financial Accounting Standards Board (“FASB”) issued a pronouncement
establishing the FASB Accounting Standards Codification as the source of
authoritative accounting principles recognized by the FASB to be applied in the
preparation of financial statements in conformity with GAAP. The standard
explicitly recognizes rules and interpretive releases of the SEC under federal
securities laws as authoritative GAAP for SEC registrants. This standard is
effective for financial statements issued for fiscal years and interim periods
ending after September 15, 2009. The Company has adopted this standard in
accordance with GAAP.




In
May 2009, the FASB issued a pronouncement which sets forth the period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements, and disclosures that an entity should make about events or
transactions that occurred after the balance sheet date. This pronouncement
requires the disclosure of the date through which an entity has evaluated
subsequent events and the basis for that date. This disclosure should alert all
users of financials statements that an entity has not evaluated subsequent
events after that date in the set of financial statements being presented. The
Company is adhering to the requirements of this pronouncement which was
effective for financial periods ending after June 15, 2009.


5


FSP
303 East Wacker Drive Corp.


Notes
to Consolidated Financial Statements


(Unaudited)





2.
            Income
      Taxes





The Company
has elected to be taxed as a real estate investment trust (“REIT”) under the
Internal Revenue Code of 1986, as amended (the "Code").  As a REIT,
the Company generally is entitled to a tax deduction for dividends paid to its
stockholders, thereby effectively subjecting the distributed net income of the
Company to taxation at the shareholder level only.  The Company must
comply with a variety of restrictions to maintain its status as a
REIT.  These restrictions include the type of income it can earn, the
type of assets it can hold, the number of stockholders it can have and the
concentration of their ownership, and the amount of the Company’s income that
must be distributed annually.





The
Company adopted an accounting pronouncement related to uncertainty in income
taxes effective January 1, 2007, which did not result in recording a liability,
nor was any accrued interest and penalties recognized with the
adoption.  Accrued interest and penalties will be recorded as income
tax expense, if the Company records a liability in the future.  The
Company’s effective tax rate was not affected by the adoption.  The
Company files income tax returns in the U.S. federal jurisdiction and the State
of Illinois jurisdiction.  The statute of limitations for the
Company’s income tax returns is generally three years and as such, the Company’s
returns that remain subject to examination would be primarily from 2006 and
thereafter.




3.
            Related
      Party Transactions





The Company
has in the past engaged in and currently engages in transactions with a related
party, Franklin Street, and its subsidiaries FSP Investments LLC and FSP
Property Management LLC (collectively “FSP”).  The Company expects to
continue to have related party transactions with FSP in the form of management
fees paid to FSP to manage the Company on behalf of its
stockholders.  FSP Property Management LLC currently provides the
Company with asset management and financial reporting services.  The
asset management agreement between the Company and FSP Property Management LLC
requires the Company to pay FSP Property Management LLC a monthly fee equal to
one percent (1%) of the gross revenues of the Property.  The asset
management agreement between the Company and FSP Property Management LLC may be
terminated by either party without cause at any time, upon at least thirty (30)
days’ written notice.  For the nine months ended September 30, 2009
and 2008, management fees paid were $82,000 and $92,000,
respectively.





On December
27, 2007, Franklin Street purchased 965.75 shares of the Preferred Stock (or
approximately 43.7%), of the Company for consideration totaling
$82,813,000.  Prior to purchasing any shares of the Preferred Stock,
Franklin Street agreed to vote any shares held by it on any matter presented to
the holders of the Preferred Stock in a manner that approximates as closely as
possible the votes cast in favor of and opposed to such matter by the holders of
the Preferred Stock other than Franklin Street and its
affiliates.  For purposes of determining how Franklin Street votes its
shares of the Preferred Stock, abstentions and non-votes by stockholders other
than Franklin Street are not considered. Franklin Street is entitled to
distributions that are declared on the Preferred Stock.





Franklin
Street is the sole holder of the Company’s one share of Common Stock that is
issued and outstanding.  Subsequent to the completion of the private
placement of the Preferred Stock in December 2007, Franklin Street has not been
entitled to share in any earnings or any dividend related to the Common Stock of
the Company.





4.
            Net
      Income Per Share





Basic
net income per share is computed by dividing net income by the weighted average
number of shares of Preferred Stock outstanding during the
period.  Diluted net income per share reflects the potential dilution
that could occur if securities or other contracts to issue shares were exercised
or converted into shares.  There were no potential dilutive shares
outstanding at September 30, 2009 and 2008.





5.
            Segment
      Reporting





The
Company operates in one industry segment, which is real estate ownership of
commercial property.  The Company owned and operated the Property for
all periods presented.


6


FSP
303 East Wacker Drive Corp.


Notes
to Consolidated Financial Statements


(Unaudited)




6.
            Cash
      Distributions





The
Company’s board of directors declared and paid cash distributions as
follows:





Quarter
      Paid
              
              Distributions Per
      Preferred Share
              
              
              Total
      DistributionsFirst
      quarter of 2009
              
              $
              1,400
              
              
              $
              3,094,000Second
      quarter of 2009
              
              $
              1,400
              
              
              $
              3,094,000Third
      quarter of 2009
              
              $
              1,013
              
              
              $
              2,238,730First
      quarter of 2008
              
              $
              1,400
              
              
              $
              1,708,000Second
      quarter of 2008
              
              $
              1,400
              
              
              $
              3,094,000Third
      quarter of 2008
              
              $
              1,400
              
              
              $
              3,094,000


7.
            Subsequent
      Event





The
Company declared a cash distribution of $1,013 per preferred share on October
16, 2009 to the holders of record of the Company’s Preferred Stock on October
30, 2009, payable on November 20, 2009.





The
Company has evaluated all subsequent events through November 6, 2009, the date
the consolidated financial statements were issued.





7





Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.





The
following discussion should be read in conjunction with the financial statements
and notes thereto appearing elsewhere in this report and in our General Form for
Registration of Securities on Form 10-K, for the year ended December 31, 2008.
Historical results and percentage relationships set forth in the consolidated
financial statements, including trends which might appear, should not be taken
as necessarily indicative of future operations.  The following
discussion and other parts of this Quarterly Report on Form 10-Q may also
contain forward-looking statements based on current judgments and current
knowledge of management, which are subject to certain risks, trends and
uncertainties that could cause actual results to differ materially from those
indicated in such forward-looking statements.  Accordingly, readers
are cautioned not to place undue reliance on forward-looking
statements.  Investors are cautioned that our forward-looking
statements involve risks and uncertainty, including without limitation the
current disruptions in the credit markets, changes in economic conditions in the
market where we own the Property and in the global markets, risks of a lessening
of demand for the type of real estate owned by us, changes in government
regulations, and expenditures that cannot be anticipated such as utility rate
and usage increases, unanticipated repairs, additional staffing, insurance
increases and real estate tax valuation reassessments.  Although we
believe the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements.  We may not update any of the forward-looking
statements after the date this Quarterly Report on Form 10-Q is filed to conform
them to actual results or to changes in our expectations that occur after such
date, other than as required by law.





Overview





FSP
303 East Wacker Drive Corp., which we refer to as the Company, is a Delaware
corporation formed to purchase, own, and operate a twenty-eight story
multi-tenant office tower containing approximately 859,187 rentable square feet
of office and retail space and a 294-stall underground parking garage located in
downtown Chicago, Illinois, which we refer to as the Property.





Franklin
Street Properties Corp., which we refer to as Franklin Street, is the sole
holder of our one share of common stock, $.01 par value per share, which we
refer to as the Common Stock, that is issued and outstanding.  Between
February 2007 and December 2007, FSP Investments LLC (member FINRA and SIPC), a
wholly-owned subsidiary of Franklin Street, completed the sale on a best efforts
basis of 2,210 shares of our preferred stock, $.01 par value per share, which we
refer to as the Preferred Stock.  FSP Investments LLC sold the
Preferred Stock in a private placement offering to “accredited investors” within
the meaning of Regulation D under the Securities Act of 1933.  Since
the completion of the placement of the Preferred Stock in December 2007,
Franklin Street has not been entitled to share in any earnings or dividend
related to the Common Stock.





We
operate in one business segment, which is real estate operations, and own a
single property.  Our real estate operations involve real estate
rental operations, leasing services and property management
services.  The main factor that affects our real estate operations is
the broad economic market conditions in the United States and, more
specifically, the economic conditions in Chicago, Illinois, the relevant
submarket.  These market conditions affect the occupancy levels and
the rent levels on both a national and local level.  We have no
influence on national or local market conditions.





Trends and
Uncertainties




Economic
Conditions





The
economy in the United States is continuing to experience unprecedented
disruptions, including increased levels of unemployment, the failure and near
failure of a number of large financial institutions, reduced liquidity and
increased credit risk premiums for a number of market
participants.  Economic conditions may be affected by numerous
factors, including but not limited to, inflation and employment levels, energy
prices, recessionary concerns, changes in currency exchange rates, the
availability of debt and interest rate fluctuations.  The current
disruptions in the U.S. economy have affected real estate values, occupancy
levels and property income levels and may continue or worsen in the
future.  At this time, we cannot predict the extent or duration of any
negative impact that the current disruptions in the U.S. economy will have on
our business and, more specifically, on our efforts to lease vacant space and to
obtain the Permanent Mortgage Loan (as defined below).





Permanent
Mortgage Loan





Management
believes that the Property has the potential for increased occupancy and rental
rates in the future and, assuming that such increases occur, management believes
that the holders of the Preferred Stock could benefit, in the form of a return
of capital that produces a positive total return on their original investment,
from either our obtaining some level of permanent mortgage debt financing, which
we refer to as the Permanent Mortgage Loan, or the sale of the Property or a
merger transaction at such time.  Management believes that the


8


Permanent
Mortgage Loan, if obtained in an amount and on terms considered favorable
relative to the current and anticipated future performance of the Property,
could benefit the holders of the Preferred Stock by providing them with a return
of a portion of their original capital investment in the Company and by
decreasing the amount of their remaining capital investment in the
Company.  Assuming that the value of the Property appreciates over
time and that the Property is ultimately sold for such appreciated value,
Management believes that the Permanent Mortgage Loan could provide the holders
of the Preferred Stock with a leveraged rate of return on their remaining
capital investment in the Company that could be enhanced over the rate of return
without the Permanent Mortgage Loan.  However, there can be no
assurance that the Property will appreciate in value over time or that the
Company will be able to obtain the Permanent Mortgage Loan on terms considered
favorable relative to the current and anticipated future performance of the
Property, especially in light of the current economic conditions described
above.  Subject to any contrary REIT requirements (or any
Property-specific current or anticipated future capital needs requirements in
the case of the Permanent Mortgage Loan only), any proceeds from the closing of
the Permanent Mortgage Loan, the sale of the Property or a merger transaction
would be distributed to the holders of the Preferred Stock and the Common Stock
in accordance with our charter.





The
Company has the right, in its sole and absolute discretion and without the
consent of any holder of shares of the Preferred Stock, to obtain the Permanent
Mortgage Loan.  Although the Company has no obligation to obtain the
Permanent Mortgage Loan, if the Company decides to obtain the Permanent Mortgage
Loan, the Company will have the right, in its sole and absolute discretion and
without the consent of any holder of shares of our Preferred Stock, to negotiate
all of the terms and conditions of the Permanent Mortgage Loan and any
refinancing thereof including, without limitation, the timing of the closing and
funding, the identity of the lender, the principal amount, the interest rate,
the maturity and the security.   As of September 30, 2009, the
Company has neither sought nor obtained the Permanent Mortgage
Loan.





Real
Estate Operations




The
Property was approximately 75% leased as of September 30, 2009 to a diverse
group of tenants with staggered lease expirations.  Management
believes that any tenant that leases 10% or more of the Property’s rentable
space is material.  The largest tenant is KPMG LLP, or KPMG, which
leases 259,090 square feet (approximately 30%) of the Property’s rentable space
through August 2012.  Consoer Townsend Environdyne Engineers, Inc., or
CTE, leases 117,379 square feet (approximately 14%) of the Property’s rentable
space through September 2014.  KPMG is one of the largest accounting
firms in the world and CTE is a subsidiary of AECOM Technology Corporation, a
provider of professional, technical and management support services (NYSE: ACM),
which has guaranteed CTE's obligations under the lease.  On February
16, 2009, KPMG notified the Company that it will be relocating to a different
property location following the expiration of its lease on August 31,
2012.  With approximately three years remaining on KPMG’s lease,
management will use that time to implement a marketing plan designed to locate a
replacement tenant (or tenants).  No other tenant leases 10% or more
of the Property’s rentable space.  On December 31, 2008, CTE notified
the Company that it would be exercising its early termination option on a
portion of the 10th
floor.  On October 1, 2009, CTE’s total leased space was reduced from
117,379 square feet to 104,086 square feet, or approximately 12% of the
Property’s total leasable space.  This reduction represents
approximately 2% of the Property’s total leasable space.  As of
September 30, 2009, 32 tenants were leasing space at the Property.





It is difficult for management to
predict what will happen to occupancy and rents at our Property because the need
for space and the price tenants are willing to pay are tied to both the local
economy and to the larger trends in the national economy, such as job growth,
interest rates, the availability of credit and corporate earnings, which in turn
are tied to even larger macroeconomic and political factors, such as
recessionary concerns, volatility in energy pricing and the risk of
terrorism.  In addition to the difficulty of predicting macroeconomic
factors, it is difficult to predict how our local market or tenants (existing
and potential) will suffer or benefit from changes in the larger
economy.  In addition, because the Property is in a single
geographical market, these macroeconomic trends may have a different effect on
the Property and on its tenants (existing and potential), some of which may
operate on a national level.  Although we cannot predict how long it
will take to lease vacant space at the Property or what the terms and conditions
of any new leases will be, we expect to sign new leases at current market rates
which may be below the expiring rates.





For
the three months ended September 30, 2009, we believe that vacancy rates
continued to increase and that rental rates continued to decrease for buildings
in Chicago’s East Loop office market.  There have been fewer prospects
and less interest overall in vacant space indicating that market conditions may
worsen in the near future.  Continuing turmoil in the global financial
markets has slowed the pace of leasing activity in the Chicago office market and
will likely prolong the time it takes to lease the vacant space at the
Property.  However, during the three months ended September 30, 2009,
we secured verbal commitments from several existing tenants for lease renewals
for approximately 17,600 square feet in aggregate.  Management
believes that the position of the Property within Chicago’s office market is
strong and management is optimistic that the existing vacant space will
ultimately be leased to new tenants.


9





Given
the current economic downturn, the potential for any of our tenants to default
on its lease or to seek the protection of bankruptcy laws has
increased.  If any of our tenants defaults on its lease, we may
experience delays in enforcing our rights as a landlord and may incur
substantial costs in protecting our investment.  In addition, at any
time, a tenant may seek the protection of bankruptcy laws, which could result in
the rejection and termination of such tenant’s lease and thereby cause a
reduction in cash available for distribution to our
stockholders.  Bankruptcy or a material adverse change in the
financial condition of a material tenant would likely have a material adverse
effect on our results of operations.





In
light of the amount of space that will need to be re-leased upon the expiration
of KPMG’s lease on August 31, 2012 and the potential for significant tenant
improvement allowances and leasing commissions, it is possible that we may need
to borrow funds in the future.  The Company may, without the consent
of any holder of shares of the Preferred Stock, obtain a revolving line of
credit of up to $66,800,000 on commercially reasonable terms to be used for
capital improvements or to pay operating expenses of the Property, if
needed.   As of September 30, 2009, the Company has neither
sought nor obtained a line of credit.




Critical Accounting
Policies




We
have certain critical accounting policies that are subject to judgments and
estimates by our management and uncertainties of outcome that affect the
application of these policies.  We base our estimates on historical
experience and on various other assumptions we believe to be reasonable under
the circumstances.  On an on-going basis, we evaluate our
estimates.  In the event estimates or assumptions prove to be
different from actual results, adjustments are made in subsequent periods to
reflect more current information.  The accounting policies that we
believe are most critical to the understanding of our financial position and
results of operations and that require significant management estimates and
judgments are discussed in Item 7, “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in our Annual Report on Form 10-K
for the year ended December 31, 2008.





Critical
accounting policies are those that have the most impact on the reporting of our
financial condition and results of operations and those requiring significant
judgments and estimates.  We believe that our judgments and estimates
are consistently applied and produce financial information that fairly presents
our results of operations.




No
change to our critical accounting policies has occurred since the filing of our
Annual Report on Form 10-K for the year ended December 31, 2008.




Results of
Operations





As
of September 30, 2009, the Property was approximately 75% leased to a diverse
group of tenants with staggered lease expirations.




Comparison
of the three months ended September 30, 2009 to the three months ended September
30, 2008





Revenue





Total
revenue decreased $0.3 million to $5.5 million for the three months ended
September 30, 2009, as compared to $5.8 million for the three months ended
September 30, 2008.  This decrease was primarily due to a decrease in
revenue from base rents of $0.5 million and a decrease in recovery of expenses
of $0.1 million as a result of a decrease in leasing and occupancy which was
partially offset by an increase of termination fees of $0.3
million.





Expenses





Total
expenses increased approximately $0.2 million to $4.7 million for the three
months ended September 30, 2009 as compared to $4.5 million for the three months
ended September 30, 2008.  The increase is attributable to an increase
in real estate taxes and insurance of approximately $0.4 million which was
partially offset by a decrease in depreciation and amortization of $0.2
million.





Comparison
of the nine months ended September 30, 2009 to the nine months ended September
30, 2008





Revenue





Total
revenue decreased by $0.7 million to $16.8 million for the nine months ended
September 30, 2009 as compared to $17.5 million for the nine months ended
September 30, 2008.  The decrease is mainly due to the decrease in
revenue from base rents of approximately $0.9 million and a decrease in
recoverable expenses of $0.5 million which was offset by an increase in
termination fees of $0.7 million.


10


Expenses





Total
expenses increased approximately $0.2 million to $13.6 million for the nine
months ended September 30, 2009 as compared to $13.4 million for the nine months
ended September 30, 2008.  The increase is attributable to an increase
in rental operating expenses real estate taxes of approximately $0.4 million
which was partially offset by a decrease in depreciation and amortization of
$0.2 million.





Liquidity and Capital
Resources





Cash
and cash equivalents were $22.4 million at September 30, 2009 and $23.9 million
at December 31, 2008.  The $1.5 million decrease for the nine months
ended September 30, 2009 is primarily attributable to $8.1 million provided by
operating activities, which was offset by $1.2 million used for investing
activities and $8.4 million used for financing activities.





Management
believes that the existing cash and cash anticipated to be generated internally
by operations will be sufficient to meet working capital requirements,
distributions and anticipated capital expenditures for at least the next 12
months.





Operating
Activities





The
cash provided by operating activities of $8.1 million for the nine months ended
September 30, 2009 was primarily attributable to a net income of approximately
$3.3 million plus depreciation and amortization of approximately $5.0 million,
offset by uses arising from other current accounts of $0.2 million.




Investing
Activities





The
cash used for investing activities of approximately $1.2 million for the nine
months ended September 30, 2009 was attributable to the purchase of real estate
assets.





Financing
Activities





Cash
used for financing activities of $8.4 million for the nine months ended
September 30, 2009 was attributable to distributions to
stockholders.




Sources
and Uses of Funds





The
Company’s principal demands on liquidity are cash for operations and
distributions to equity holders.  As of September 30, 2009, we had
approximately $9.2 million in accrued liabilities.  In the near term,
liquidity is generated by cash from operations.





Contingencies





We
may be subject to various legal proceedings and claims that arise in the
ordinary course of our business.  Although occasional adverse
decisions (or settlements) may occur, we believe that the final disposition of
such matters will not have a material adverse effect on our financial position
or results of operations.





Related
Party Transactions





We
have in the past engaged in and currently engage in transactions with a related
party, Franklin Street, and its subsidiaries FSP Investments LLC and FSP
Property Management LLC, which we collectively refer to as FSP.  We
expect to continue to have related party transactions with FSP in the form of
management fees paid to FSP to manage the Company on behalf of our
stockholders.  FSP Property Management LLC currently provides us with
asset management and financial reporting services.  The asset
management agreement between us and FSP Property Management LLC requires us to
pay FSP Property Management LLC a monthly fee equal to one percent (1%) of the
gross revenues of the Property.  The asset management agreement
between us and FSP Property Management LLC may be terminated by either party
without cause at any time, upon at least thirty (30) days’ written
notice.  For the nine months ended September 30, 2009 and 2008,
management fees paid were $82,000 and $92,000, respectively.





11





On
December 27, 2007, Franklin Street purchased 965.75 shares of the Preferred
Stock (or approximately 43.7%), of the Company for consideration totaling
$82,813,000.  Prior to purchasing any shares of the Preferred Stock,
Franklin Street agreed to vote any shares held by it on any matter presented to
the holders of the Preferred Stock in a manner that approximates as closely as
possible the votes cast in favor of and opposed to such matter by the holders of
the Preferred Stock other than Franklin Street and its
affiliates.  For purposes of determining how Franklin Street votes its
shares of the Preferred Stock, abstentions and non-votes by stockholders other
than Franklin Street are not considered. Franklin Street is entitled to
distributions that are declared on the Preferred Stock.





Franklin Street is the sole holder of
the Company’s one share of Common Stock that is issued and
outstanding.  Subsequent to the completion of the private placement of
the Preferred Stock in December 2007, Franklin Street has not been entitled to
share in any earnings or any dividend related to the Common Stock of the
Company.


12





Item
3.          Quantitative and
Qualitative Disclosures About Market Risk.





Not
applicable.





Item
4.          Controls and
Procedures.





Not
applicable.





Item
4T.       Controls and
Procedures.





Disclosure
Controls and Procedures





Our
management, with the participation of our principal executive officer and
principal financial officer, evaluated the effectiveness of our disclosure
controls and procedures as of September 30, 2009. The term “disclosure controls
and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 or the Exchange Act, means controls and other
procedures of a company that are designed to ensure that information required to
be disclosed by a company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SEC's rules and forms.  Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the company’s management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required
disclosure.  Management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving their objectives and management necessarily applies its judgment in
evaluating the cost-benefit relationship of possible controls and
procedures.  Based on the evaluation of our disclosure controls and
procedures as of September 30, 2009, our principal executive officer and
principal financial officer concluded that, as of such date, our disclosure
controls and procedures were effective at the reasonable assurance level.





Changes
in Internal Control Over Financial Reporting





No
change in our internal control over financial reporting occurred during the
quarter ended September 30, 2009 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.







13


PART
II – OTHER INFORMATION





Item
1.          Legal
Proceedings.





From
time to time, we may be subject to legal proceedings and claims that arise in
the ordinary course of our business.  Although occasional adverse
decisions (or settlements) may occur, we believe that the final disposition of
such matters will not have a material adverse effect on our financial position,
cash flows or results of operations.





Item
1A.       Risk Factors.





Not
applicable.





Item
2.          Unregistered Sales
of Equity Securities and Use of Proceeds.





None.





Item
3.          Defaults Upon
Senior Securities.





None.





Item
4.          Submission of
Matters to a Vote of Security Holders.





None.





Item
5.          Other
Information.





None.





Item
6.          Exhibits.





See Exhibit Index attached hereto,
which is incorporated herein by reference.





14




SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.











FSP
      303 EAST WACKER DRIVE CORP.Date
            Signature
            TitleDate:  November
      6, 2009
            /s/ George J.
      Carter
              George
      J. Carter
            President
              (Principal
      Executive Officer)Date:  November
      6, 2009
            /s/ Barbara J.
      Fournier
              Barbara
      J. Fournier
            Chief
      Operating Officer
              (Principal
      Financial Officer)

















15





EXHIBIT
INDEX





Exhibit
      No.
            Description31.1
            Certification
      of FSP 303 East Wacker Drive Corp.'s principal executive officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
            Certification
      of FSP 303 East Wacker Drive Corp.'s principal financial officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
            Certification
      of FSP 303 East Wacker Drive Corp.'s principal executive officer pursuant
      to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.32.2
            Certification
      of FSP 303 East Wacker Drive Corp.'s principal financial officer pursuant
      to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.


16